This paper discusses the features and problems of the Japanese accounting system including related aspects of the tax system, focusing on accounting rules and practices with respect to banks.The Japanese accounting system is based on three closely interrelated legal structures consisting of the Commercial Code, the Securities and Exchange Law, and various tax laws. In recent years, there has been a growing call for review and for establishment of a new framework but which still enables the original aims of each, namely the calculation of profit available for dividends under the Commercial Code, disclosure under the Securities and Exchange Law, and calculation of taxable income under various income tax laws, to be fulfilled.Specific issues concerning the Japanese accounting system include: the introduction of market value accounting (MVA) principles, the amendment of accounting practices to take account of off-balance-sheet transactions, the expansion of the scope of disclosure, review of consolidated accounting standards, improvement of the credit loss allowance system and the international harmonization of accounting and tax systems. This paper will take up each one of these and examine possible future directions.